Big Box Retailers Pitch 'O Solar Mio' to Homeowners

Big retailers are not only putting solar energy systems are the roofs of their stores, they're getting in the residential solar panel business. But don’t expect an install-it-yourself kit any time soon.

Despite the growing interest, a surprising amount of customization goes into these residential systems, which then need a specialized electrician to install them.

As a result, the market is still for the “do-it-for-me customer,” says Steve Holmes, a spokesman for Home Depot, which has teamed up with BP Solar .

BP’s Solar Home Solutions is now available in 500 stores -- mostly in states with solar incentives, such as Texas, Colorado and Florida. It launched in a select number of stores California, New Jersey and New York in 2004.

The company would not provide sales figures or projections but says legislation mandating renewable energy or offering incentives will be a critical to future sales.

That’s also true at Sam’s Club, a unit ofWal-Mart, where members are eligible for $2,500 discounts from installation partners.

Installation Equation

At this point, retailers involvement in solar panels is minimal. Sam’s Club, for instance, provides an unmanned display kiosk for its partners to offer information. But since the store’s brand is at stake, it vets the suppliers, who benefit from store traffic and the strong brand association.

By contrast, Ikea is looking to invest in early-stage companies, producing solar panels among other clean tech products, but the first production is two-to five years off.

“To date solar has been a niche product for either really green or really techie homeowners and this is one of the few programs that is bringing it to the general public, to the masses,” says Mike Hall, president of San Diego-based Borrego Solar, a Sam’s Club partner.

“As the industry evolves, and as the products evolves, we will get to get point where it will be easier and easier to do, and you will need less and less customization but that’s just not the case now,” he says.

Hall says his partnership with Sam’s Club has triggered hundreds of inquiries and he expects the program to be expanded beyond an initial nine stores in southern California.

Installers assess each homeowners’ roof space, tree shading and electricity use patterns which can vary widely between households.

They also typically handle the sometimes cumbersome paperwork needed for local permits and applications for state and federal subsidies, which are critical to defraying steep initial costs, which typically run between $20,000-$40,000.

Driving Factors - Home Economics

Though the customization factor has slowed commercial appeal,a number of factors make a solid case for going solar.

Most obvious is the seemingly inexorable rise in the cost of electricity. According to the California Public Utilities Commission, electricity prices rose 6.7 percent annually between 1971 and 2001.

Solar power systems reduce homeowner electricity costs by replacing all or some portion of electricity that is need from utility-supplied power grid.

Roughly one third of residential solar units are ‘off-grid’ – not tied into utility provide power lines - according to the Solar Energy Industry Association's Monique Hanis, and are usually used in remote locations far from grid connections, where power is storied in batteries.

Akeena Solar

‘Grid-tied’ solar systems allow homes producing more electricity than they need – say, during the heat of the day – to sell that power back to utilities, through a process known as net-metering.

There are also additional advantages. Besides reducing electricity costs, once a solar system is paid for it is an asset you own (typically with a 30 year or more lifetime) and it increases your home’s value.

For every dollar you save, your home increases by $20 in value, according to the Appraisal Institute, a professional real estate group.

To encourage the move to solar, the federal government and numerous states offer incentives, which can dramatically reduce the overall cost.

In California, for instance, these combined incentives can trim 50 percent off the cost of a system. San Francisco just added an additional $6,000 tax credit.

New Jersey's rebate program covered $31,215 of the total $45,000 cost of a system installed in a new 4,000-square-foot home (pictured above), according to the website of Akeena Solar, the company that installed the unit.

The system helped reduce the homeowner’s monthly electric bills by nearly $63 a month, which more than covered the monthly payment ($54) of the home equity loan the homeowner took out to cover the remaining $13,785 cost, the site says.

Moreover, there are additional, emerging financing options, including third-party deals which require little or no upfront payment.

In some cases, the installer assumes the upfront costs but then owns the asset and sells electricity the system produces back to the homeowner, presumably at an attractive discount.

With all the stepped up activity, prices are bound to come down.

San Francisco-based Sungevity, for instance, offers solar power units starting at $7,500.

It can offer such low prices (but so far only in the greater San Fran area) because it does business through the Internet and assesses a home’s solar prospects based on satellite images. Just enter your address on the company's website, identify your rooftop and the company will produce an estimate in a few days.

The company, which still relys on a network of subcontractors to install its system, says its first completely on-line sale was to an octogenarian.